Business Correspondents moves to form self-regulatory organisation
Encouraged by the Reserve Bank of India's invitation to set up self-regulatory organisations (SROs) for financial services and payments industry, the Board of Business Correspondent Federation of India (BCFI) has approved the formation of an SRO, subject to due consent from the RBI.
 
The BCFI is a body representing companies working towards delivery of financial services to underbanked and unbanked citizens and is already involved in building standards and practices for the sector.
 
The federation has appointed Sunil Kulkarni as the new head of the BCFI and CEO (designate) for the SRO. An industry veteran, Kulkarni is one of the founding members of the BCFI and has been on its board since its inception.
 
The team at BCFI will improvise upon the code of conduct and grievance redressal mechanism developed last year, and implement them among its members with key focus on ensuring customer protection and betterment of service standards.
 
In complete alignment with the government's financial inclusion policy framework and the RBI's vision of National strategy on Financial Education, the BCFI SRO team would work towards expediting accessibility of financial services to the citizens and standardisation of banking processes to different corporate BCs.
 
The SRO for BCs will work towards setting and enforcing rules and standards relating to the conduct of corporate BCs and agent BCs in the industry (members) with the aim of protecting the customer and promoting ethics, equality and professionalism.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    SEBI Directs Prabhat Dairy To Deposit Rs1,292 Crore in Escrow Account by 30th October
    Market regulator SEBI (Securities and Exchange Board of India) has issued an interim order directing Prabhat Dairy to deposit Rs1,292.46 crore to an interest bearing special escrow account in a nationalised bank. The funds need to be credited into the escrow account [“Escrow Account in Compliance with SEBI Order dated 20 October 2020 – A/c (in the name of the Company)”] within seven working days of the receipt of the SEBI order. The audit Committee of Prabhat Dairy has been asked to directly monitor the process of creation and funding of this special escrow account and furnish a compliance report to SEBI by 30 October 2020.
     
    The SEBI action is a good interim step to ensure that rogue promoters do not mismanage funds even further. Moneylife wrote yesterday about how investors in Prabhat Dairy are being shortchanged by the promoters. 
     
    SEBI’s order says, “… the conduct of the Company and its Promoters/Directors does not inspire confidence in investors and exhibits blatant unwillingness to be transparent about the financial dealings. The stark opaqueness on the side of the Company and its Promoters/Directors as regards the availability of the Transaction proceeds for distribution to the shareholders of the Company (as had been publicly announced earlier) has aroused suspicion and anxiety in the minds of investors and other stakeholders.” 
     
    The regulator added “it is necessary to adopt some urgent measures to safeguard the interests of minority investors/shareholders of PDL and protect the integrity of the securities market by ensuring that the proceeds of the transaction are secured for the benefit of its investors.”
     
    SEBI clarified that “the directions in these proceedings are limited to only PDL and its Promoters/Directors, viz. Sarangdhar Ramchandra Nirmal and Vivek Sarangdhar Nirmal as they have prima facie failed to cooperate with the forensic auditor appointed by SEBI and have not furnished the requisite information and documents as detailed at Table V, which leaves an apprehension of fund diversion.”
     
    The operations of the new special escrow account will be monitored by JM Financial (as its manager) till the completion of the forensic audit. SEBI has added that “JM Financial shall allow debits from the Special Escrow Account only for the purposes of administrative expenses of PDL. The funds in the Special Escrow Account shall not be used by PDL for any other lines of business (including for deployment towards its residual business i.e. animal nutrition and cattle feed business), as committed in its disclosure to the stock exchanges on March 25, 2019.”
     
    Prabhat Dairy has been directed to furnish a weekly statement of debits/credits/balance in the special escrow account from 30 October 2020 to JM Financial till the completion of the forensic audit. 
     
    In case of failure to comply with this SEBI order, the promoters Sarangdhar Ramchandra Nirmal and Vivek Sarangdhar Nirmal, have been restrained from disposing, selling or alienating, in any other manner, their assets or divert funds. They have also been directed to cooperate with the forensic auditor appointed as per the SEBI letter dated 17 July 2020 and to furnish all information/documents to the forensic auditor/SEBI within seven working days. The audit committee of PDL has been directed to ensure that all data /information is submitted to the forensic auditor/SEBI within seven working days. 
     
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    COMMENTS

    saharaaj

    1 month ago

    Prabhat dairy are good milk men they know how to milk the cash cows

    saharaaj

    1 month ago

    too little too late and least deterrent

    bhaskar.jain

    1 month ago

    Good impact of Moneylife's article. Promoter should come clean now

    RBI Imposes Rs4.5 Crore Penalty on IndusInd Bank; Shriram City Union Penalised Rs5 Lakh
    The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs4.5 crore on IndusInd Bank for violating norms such as ‘exposure norms’, ‘prudential norms on income recognition, asset classification and provisioning pertaining to advances’, etc. 
     
    The RBI release mentions that ‘SPARC – monitoring of information submission by bank’, ‘creation of a central repository of large common exposures – across banks’, ‘central repository of information on large credits (CRILC) – revision in reporting’, and ‘disclosure in financial statements- notes to accounts’ were also among the other norms violated by IndusInd Bank. 
     
    RBI reported that the violations were discovered during the statutory inspection of the Bank with reference to its financial position as on 31 March 2019. Additionally, the Risk Assessment Report (RAR) too exposed non-compliance with certain directions issued by RBI.
     
    A show cause notice was issued to the Bank to explain why penalty should not be imposed for its failure to comply with the directions issued by RBI. However, RBI decided to impose a monetary penalty on the bank, to the extent of non-compliance with the directions after considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions.
     
    However, the central bank clarified that the penalty has been imposed on the basis of the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the Bank with its customers.
     
    On 23rd September, RBI had also imposed a penalty of Rs5 lakh on Shriram City Union Finance (SCUF) for non-compliance with its directions on verification of the ownership of gold jewellery contained in Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 and on reporting of frauds contained in Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016. 
     
    RBI added “This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934, taking into account the failure of the company to adhere to the aforesaid directions issued by RBI.”
     
    Sources say that the matter relates to the annual inspection of SCUF by RBI for FY17-18. RBI was of the opinion that SCUF had been remiss on the following two fronts:
     
    Inadequate records for ownership of gold against which certain gold loans were granted: In accordance with RBI rules, NBFCs shall keep a record of the verification of the ownership of the jewellery against which loans are granted. The regulator was of the opinion that SCUF had not observed the same in certain cases, despite the loans having been repaid on schedule and the field inspection reports, KYC documents and other records having been maintained. The Chennai-based NBFC (non-banking financial company) had explained to RBI that in India it is difficult for gold owners to produce receipts for jewellery, which is often handed down over generations. But RBI preferred to treat this as a contravention of rules.
     
    Delayed reporting of fraud for certain personal loans: This matter pertained to FY10-11 when six personal loans were granted to Chennai Port Trust employees with the guarantee of co-employees of SCUF in the course of business and subsequently they turned delinquent. As a part of the recovery process, on execution of arbitration order and further enquiry, it was revealed that the guarantors had not guaranteed the said loans. Thus the recovery proceeds were dropped by SCUF and the respondents had also provided SCUF with their letters of satisfaction with regard to the resolution of their complaints. As the loan transactions were genuine, SCUF did not classify the transactions as fraud and hence did not deem it fit to be reported as such to RBI. However, RBI opined that the matter should have been considered as one of cheating and forgery and required that it be reported.
     
    SCUF did subsequently report the matter to RBI, but since such reporting was delayed, RBI decided to impose a monetary penalty.
     
    The NBFC has reiterated its stated policy to be a fully compliant NBFC. The NBFC also said that wherever required, corrected processes have already been put in place.
     
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